4.


Legal collections

4.1. General information

In China, private law regulates the relationships between people or companies. There is no need to give a warning prior to starting a lawsuit. When a case is sent to a court, there may be a pre-court procedure, which can be skipped before the normal proceedings begin.

4.2. Legal systems

In China, courts are divided into the Supreme People’s Court, the high people’s courts, the intermediate people’s courts, and the primary people’s courts. Generally, the primary people’s courts have jurisdiction as courts of first instance over civil cases.

The intermediate people’s courts have jurisdiction as courts of first instance over civil cases that have major impact on the areas under their jurisdiction.

The high people’s courts have jurisdiction as courts of first instance over civil cases that have major impact on the areas under their jurisdiction.

The Supreme People’s Court has the right to give interpretations of questions concerning specific applications of laws and decrees in judicial proceedings.

Supreme People's Court

  • The highest independent court
  • Final judicial judgments

High people’s courts

  • Of provinces
  • Of autonomous regions
  • Of municipalities directly under the central government
  • Supervised and guided by the Supreme People’s Court

Intermediate people’s courts

  • Established in the prefectures of a province or an autonomous region
  • Established in municipalities directly under the central government
  • Of autonomous prefectures
  • Of municipalities directly under the jurisdiction of a province or an autonomous region
  • Supervised and guided by high people’s courts

Primary people’s courts

  • County people’s courts and municipal people’s courts
  • People’s courts of autonomous counties
  • People’s courts of municipal districts
  • Supervised and guided by intermediate people’s courts

4.3. Required documents

The following conditions must be provided when a lawsuit is filed:

  • The plaintiff must be a citizen, a legal person, or any organisation that has a direct interest in the case
  • There must be a definite defendant
  • There must be a specific claim or claims, facts, and a cause or causes for the suit
  • The names, genders, ages, ethnic status, occupations, work units, and home addresses of the parties must be provided. If the parties are legal persons or any other organisations, their names, addresses, and the names and posts of the legal representatives or principals must be provided
  • The evidence and its sources, as well as the names and home addresses of the witnesses, must be provided
  • The original documents do not need to be provided

When a lawsuit is filed, copies of the statements as well as other evidence will be provided depending on the number of defendants in court.

4.4. Legal dunning procedures

When a creditor requests the payment of a debt or the recovery of negotiable instalments from a debtor, they may, if the following requirements are met, apply to a primary people’s court that has jurisdiction over orders for payment.

  • No other debt disputes exist between the creditor and the debtor
  • An order for payment can be served on the debtor

China is the most credit-averse country with fewer than 40% of the business-to-business transactions made on credit.

The debtor will, within 15 days after their receipt of the order for payment, clear their debt or submit to the people’s court their dissent in writing. If the debtor has neither dissented from nor complied with the order for payment within 15 days, the creditor may apply to the people’s court for execution. The order for payment is effective only when the debtor has failed to submit their dissent in writing within 15 days. Once such dissent is submitted, the order for payment will be terminated and the creditor will need to take further legal action.

4.5. Lawsuits

Lawsuits can only be initiated by creditors.

Generally, a civil lawsuit brought against a citizen will be under the jurisdiction of the people’s court in the area where the defendant lives. If the place of the defendant’s address is different from that of the defendant’s usual residence, the lawsuit will be under the jurisdiction of the people’s court in the area of the defendant’s habitual residence.

A civil lawsuit brought against a legal person or any organisation will be under the jurisdiction of the people’s court in the area where the defendant has their domicile or subject to the contract stipulations.

A lawsuit brought in a contract dispute will be under the jurisdiction of the people’s court in the area where the defendant has their domicile, or where the contract is performed. Not all stipulations about jurisdiction are listed (see the Civil Procedure Law of the PRC).

4.6. Appeals

If a party disagrees with a judgment made by a local people’s court of first instance, the party has the right to lodge an appeal with an immediate superior people’s court within 15 days from the date when the written judgment was served.

When filing an appeal, a petition for the purpose will be submitted. The content of the appeal petition will include the names of the parties, the names of the legal persons and their legal representatives or the names of other organisations and their principals, the name of the people’s court where the case was originally tried, the file number of the case, the cause of action, the claims of the appeal, and the reasons.

4.7. Expected time frame

When a case is tried according to a summary procedure, the people’s court will conclude the trial within three months from the date it’s entered on its trial docket.

When a case is handled according to an ordinary procedure, the people’s court will conclude the case within six months from the date it’s accepted.

When an extension to a period is necessary under special circumstances, a six-month extension may be allowed, subject to the approval of the president of the court. Further extensions, if needed, will be reported to the people’s court at a higher level for approval. A case on appeal will be concluded within three months after being docketed by the people’s court.

However, the period for a people’s court to try a foreign-related civil case will not be limited by the above-mentioned provisions.

4.8. Costs and interest in the legal phase

The costs and interest in the legal phase can be claimed with the same rate set by the People’s Bank of China, plus 30% to 50% (the Reply of the Supreme People’s Court on the Calculation Standard of Late Payment Penalties).

(End of chapter 4 - Legal collections)

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